16 March 2009

Matt doesn't think that cash handouts can lead to long-term growth. A cynic might argue that neither does conventional aid. I also agree that targeted handouts could encourage dependency and moral hazard – that's why you'd need either conditional transfers like PROGRESA, or else just completely random/universal transfers.

In the nick of time, one of my very favourite irregular macroeconomist bloggers, Younotsneaky! links to a slightly old paper on the use remittances by individuals in Bangladesh. Much of it goes on investment, which of course potentially means an impact on growth. Of course remittances might not be the same as a completely free cash handout, there might be some moral obligation to use them more wisely, but the figures are interesting nonetheless.

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"Because the consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else." (Lucas 1988, On the Mechanics of Economic Development)

"The philosophers have hitherto only interpreted the world in various ways; the point however is to change it" (Marx 1888)

I'm Head of Research at Ark Education Partnerships Group, a charity working with governments and non-state actors in developing countries to give every child an excellent education. Roving Bandit is a reference to Mancur Olson, not because I think I'm some kind of badass.